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ACQUISITION: BOWATER TO ACQUIRE ALLIANCE FOREST PRODUCTS

GREENVILLE, SC, & MONTREAL, QC — Bowater Inc and Alliance Forest Products Inc. announced the signing of a definitive agreement by which Bowater will acquire all of the outstanding shares of Alliance….

GREENVILLE, SC, & MONTREAL, QC — Bowater Inc and Alliance Forest Products Inc. announced the signing of a definitive agreement by which Bowater will acquire all of the outstanding shares of Alliance. The aggregate value of the transaction, including assumed debt, is approximately $1.2 billion. The boards of directors of both companies have approved the transaction.

Arnold M. Nemirow, Bowater’s chairman, president and chief executive officer, said, “The Quebec mills are modern, cost-competitive facilities with a reputation for excellent quality. The addition of Alliance’s supercalendered and specialty papers to Bowater’s coated groundwood and value-added papers will make the combined company a premier supplier.”

Pierre Monahan, Alliance’s president and chief executive officer, stated that the sale is in the best interests of Alliance’s shareholders, customers and employees. The record-low Canadian dollar makes investment by American buyers attractive while making it difficult for Canadian companies to expand in the US.

However, there is some concern in the market that the timing of the transaction is poor, given the softening US and Canadian economy. After approval by Alliance shareholders and regulatory authorities, the merger is expected to be completed by the end of June. The sale ended weeks of speculation about the fate of Alliance, which had been rumoured to be on the market. Alliance, which was spun out of Domtar, has mills in Donnaconna and Dolbeau, QC, as well as Coosa Pines, AL.